LawFlash

Patent Eligibility Debate Touches on Medical Device Industry

August 13, 2019

Authors and contactsOlga Berson, Ph.D., Conor S. Ball

Two recent letters to the US Senate stand on opposite sides of the debate over patent subject matter eligibility. Proposed legislation could reform Sections 101 and 112 of the US Patent Act, changing the way patent subject matter eligibility is determined, with possible effects on medical device innovation, affordability, and availability.

Patent subject matter eligibility continues to create headlines. Most recently, a group of law professors, former chief judges of the US Court of Appeals for the Federal Circuit (CAFC), and former heads of the US Patent and Trademark Office (USPTO) sent a letter[1] to the US Senate Judiciary Committee’s Intellectual Property Subcommittee (IP Subcommittee) in support of recently proposed legislation that would change the way patent subject matter eligibility is determined.

The Patent Lawyers Letter stands in opposition to a letter from the American Civil Liberties Union (ACLU) and other medical, health, and civil rights organizations arguing against the proposed legislation.[2] The two letters make clear that the debate on patent eligibility is far from over, and could lead to additional revisions of the bill.

ACLU Letter and June Hearings

In June 2019, the IP Subcommittee held hearings on “The State of Patent Eligibility in America.” The hearings gathered feedback on a bipartisan draft bill to reform Sections 101 and 112 of the US Patent Act.[3] While a final bill was originally expected before the August recess, it has not been released.

Before the hearings, the ACLU sent a letter to the IP Subcommittee arguing that the proposed legislation “would authorize patenting products and laws of nature, abstract ideas, and other general fields of knowledge[,] permit patenting of human genes and naturally-occurring associations between genes and diseases[, and] create barriers to patients.”[4] The letter advocated for “narrower paths” to addressing current patent eligibility law rather than “rewriting current 101 standards.”[5]

At the hearings, many witnesses noted a lack of clarity in recent patent eligibility jurisprudence. For example, former Federal Circuit Chief Judge Paul Michel testified:

In my view, recent cases are unclear, inconsistent with one another and confusing. I myself cannot reconcile the cases. That applies equally to Supreme Court and Federal Circuit cases. Nor can I predict outcomes in individual cases with any confidence since the law keeps changing year after year. If I, as a judge with 22 years of experience deciding patent cases on the Federal Circuit’s bench, cannot predict outcomes based on case law, how can we expect patent examiners, trial judges, inventors and investors to do so?[6]

Proponents of the legislation expressed concern that the uncertainty and narrowing of patent eligibility in the United States results in capital investment, jobs, and talent increasingly going to “foreign competitors [that] have clarified and broadened eligibility and otherwise strengthened their patent systems.”[7] Senators Tillis (R-NC) and Coons (D-DE), co-authors of the draft bill, noted that a lack of confidence in the patent system stifles “the free flow of information” and prevents others from “build[ing] upon those discoveries.”[8]

Further, proponents argued that companies developing new medical devices rely on a clear, strong, and predictable patent regime to protect their inventions, recover R&D costs, and fund research.[9] They argued that if a company is unable to secure patent protection for innovative medical devices, the company may not be sufficiently incentivized to invest additional resources in these innovative technologies.

Witnesses favoring the proposed legislation pointed out that recent claims to specific medical device systems, such as a digital microscope for use in ophthalmic surgery and a laser device system applied to a human tissue region in surgery coupled with a control computer, were rejected by the USPTO as “abstract.” Similarly, a court found a heart monitoring device used to detect heart disease by identifying changes in variability of heartbeat timing not to be patent eligible because “monitoring the irregularity of a heartbeat is an abstract idea, and . . . the monitor [is] operated by using a general computer.”[10] The witnesses noted that, as a result of the current patent eligibility jurisprudence, they no longer know what “laws of nature,” “natural phenomena,” and “abstract ideas” actually mean and what inventions may fall into these unpatentable categories.

Conversely, opponents of the proposed legislation argued that rewriting Section 101 as proposed “will raise the price of healthcare . . . [because] [s]cientists, researchers, and small companies could be forced to pay royalties to patent-holders on patented naturally occurring correlations, human genes isolated from the body, and abstract concepts, if they are allowed to engage in research at all. Patent-holders will be able to exclude others from whole fields of knowledge and will charge monopoly prices to the public. Patients will lack access to confirmatory testing. Market-participants will be unable to improve upon inventions or testing accuracy during the patent-period.”[11]

Patent Lawyers Letter

The Patent Lawyers Letter contended that “the proposed amendments preclude ‘implicit or judicially created exceptions to subject matter eligibility’” and do not alter a “fundamental requirement in the patent statutes that only inventions or discoveries falling within the statutory categories in § 101 . . . are eligible for patent protection.”[12] The letter argued that, historically, Section 101 precluded “only a limited number of technological inventions from patentability, because [Sections] 102, 103, and 112 have ensured that the patent system promotes only innovative efforts in inventions and discoveries.” [13] Thus, the letter reasoned, “the draft legislation returns the US patent system back to its core function in promoting the innovations—the useful arts.”[14]

The Patent Lawyers Letter also addressed the ACLU’s arguments regarding negative effects of the proposed bill on the cost and availability of medicines and other medical innovations to patients. The letter noted that patent protection plays a critical role in incentivizing the substantial investment required to translate the results of basic research into high-quality, commercially available products and to educate physicians on the value of such new products. This, in turn, “promotes greater access for patients to cutting-edge, live-saving technologies.”[15]

Implications for Medical Device Innovators

Medical devices have traditionally been the very types of “technical and concrete” inventions that the sponsors of the draft bill, Senators Tillis and Coons, are trying to protect.

In fact, in their post-hearing joint statement, Senators Tillis and Coons emphasized the importance of fixing the current system in which “technical and concrete” inventions may be patent ineligible regardless of whether they are novel.[16] They promised to “investigate ways to sharpen the ‘field of technology’ requirement to ensure that critical advances like artificial intelligence and medical diagnostics qualify, but not economic transactions or social interactions.”[17]

With advancements in medical device technologies and increasing integration of software, patent eligibility considerations implicate a growing realm of medical devices. If the draft bill is enacted, a broader range of subject matter could be patent eligible and more medical device technologies may have stronger commercialization potential in the United States. While the new legislation could make the patent eligibility of medical devices more predictable, it may also weaken a company’s ability to fight patents asserted by patent trolls or competitors.

It may be some time before patent eligibility is dramatically expanded in the United States, especially as a final bill has yet to be released and no timetable has been given.[18] Even when (and if) a final version of the bill passes, there will be continued uncertainty given that new statutory language will be tested in litigation.

Meanwhile, it is advisable for medical device companies to be mindful of the US Supreme Court’s existing patent eligibility jurisprudence, and especially of the three exclusions of ineligible subject matter jurisprudence—laws of nature, natural phenomena, and abstract ideas —both in litigation and when drafting patent applications.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, Olga Berson (Century City) and Conor S. Ball (San Francisco), or any of the following lawyers from Morgan Lewis’s medical device team:

[18] According to some commentators, the delay is due to disagreement on the language of the research exemption, which potentially creates a safe harbor for fundamental research. It is also possible that additional revisions of the bill are under consideration to balance interests of patent holders and patient advocacy groups, to clarify the meaning of a number of statutory terms, and to resolve the debate regarding Section 112(f) amendment.